Fitch Ratings Affirms 1 & Downgrades 2 Shyppco Tranches.

NEW YORK -- Fitch Ratings affirms one tranche and downgrades two tranches issued by Shyppco Finance Company LLC, (Shyppco). The following rating actions are effective immediately:

-- $31,941,609 class A-2A notes affirmed at 'AAA';

-- $78,576,357 class A-2B notes downgraded to 'BB-' from 'BBB-';

-- $35,135,770 class A-2C notes downgraded from 'BBB-' to 'BB-';

-- $62,000,000 class A-3 notes remain at 'C';

-- $16,500,000 class B notes remain at 'C'.

Shyppco is a collateralized debt obligation (CDO), which closed May 5, 1998 and is managed by MBIA Capital Management Corp. Shyppco is composed primarily of high-yield bonds and approximately 17% investment-grade bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios.

Since the last rating action, the collateral has experienced further deterioration. The weighted average rating has decreased from 'B/B-' to 'B-/CCC+'. The overcollateralization (OC) ratio has decreased from 74.77% as of June 2002 to 55.05% as of the most recent trustee report dated May 10, 2004. The OC test is measured by the total collateral divided by the sum of classes A-2, A-3, and B notes, including deferred interest. An implied senior OC test (total collateral divided by the sum of class A-2A, A-2B, and A-2C notes) is equivalent to 103.42%. As of the most recent trustee report available, Shyppco's defaulted assets represented 14.25% or $21.32 million of total collateral and eligible investments. Assets rated 'CCC+' or lower represented approximately 45.47%, including defaults.

The ratings of the class A-2A notes reflect the insurance wrap provided by MBIA Insurance Corp., rated 'AAA' by Fitch. The class A-2B and A-2C notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The class A-3 and class B Notes have been deferring interest since December 1998.

Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the current ratings assigned to the classes A-2B and A-2C notes no longer reflect the current risk to noteholders.

Fitch will continue to monitor and review this transaction for future rating adjustments.

Additional deal information and historical data are available on the Fitch Ratings web site at 'www.fitchratings.com'.